MAS Financial Services' Q1 FY26 PAT grew ~19% YoY to Rs 839 million (in line). Fee income rose ~55% YoY to ~Rs 300 million. Net total income was up 36% YoY to Rs 2.4 billion (in line), while opex at Rs 827 million grew ~46% YoY (8% higher than our estimate). Pre-provision operating profit was Rs 1.5 billion (in line) and grew 31% YoY.
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Motilal Oswal Report
MAS Financial Services Ltd. reported in-line earnings for Q1 FY26. The earnings were supported by strong disbursement growth of ~17% YoY, which led to an AUM growth of ~20% YoY. Asset quality remained largely stable, while credit costs continued to remain elevated at 1.4%. The company has a niche expertise in the SME segment, and its asset quality is perhaps the best among its MSME lending peers.
Going forward, the organic retail mix is expected to continue rising, supporting further yield enhancement and margin expansion. Although operating expenses will remain elevated due to sustained investments in distribution and technology, it will still be able to deliver healthy return ratios.
We model a CAGR of 21%/24% standalone AUM/PAT over FY25-FY27E, with RoA/RoE of 2.9%/15% in FY27E. The company has maintained high earnings quality, backed by its risk-calibrated AUM growth.
Reiterate Buy with a target price of Rs 400 (premised on 2.2x Mar'27E book value).
Key risk: Slowdown in the economic environment leading to sluggish loan growth and deterioration in asset quality.
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